Buying versus leasing

[FENCC01]

@sobelair

Hi,

If I buy a new 737-700, and I finance it with the "cheap" 0,5% loan that AS offers, it will cost me 46,5 million plus 8 million intrest (assuming that I pay back capital and intrest over 50 weeks). I have taken into account that I pay less intrest as I pay back more capital each week.

After 50 weeks the plane has cost me 54,5 million, and I end up with a 4 year old plane that is worth 40,2 million. That means the actual cost is 14,3 million, or 286.500 dollar per week. If I lease the same plane, the weekly cost is 232.500 dollar per week. And… I can at any time replace it with a brandnew plane for the price of the seats.

In other words, buying and owning a plane is 15% more expensive than leasing a plane. It should be the other way around.

Jan

You have to think about you are not beatable… e.g. I have a Boeing 737-700 HGW (winglets) which flies a 2,000km turn with 56% margin on 100% prices and same route a Boeing 737-800 HGW (winglets) which is leased just does 29%. If someone wanna beat me with a leased plane what should he take? A Boeing 737-700 BGW? This plane can also don’t resist my bought 73W. A Dash 8-Q400A (most profitable plane in whole game) can’t beat the 73W when it’s bought, too… You shouldn’t lose the view on a business which has future. I had once around 280M AS$ earnings but 100M AS$ were just leasing costs! With bought planes it would be maybe 5M AS$… all costs which you don’t have with leased planes…